5 Different Tips for Handling a Settlement Agreement
by Arina Smith Business Planning 05 February 2021
A settlement agreement is a contract between an employee and an employer that binds the latter to compensate for something the former has accused them of. For example, were a business manager to unfairly dismiss someone, their former employee would have the legal right to seek compensation from them. These agreements aren’t one-sided, however. The former employee is also not allowed to break confidentiality or pursue any more legal claims after the deal has been made. These contracts are usually agreed upon at the termination of the worker’s employment, but this isn’t always the case. Settlement agreements should help to clear the air between the parties, allowing both to walk away with a clear understanding of where they stand. However, they can also be very stress-inducing and – when handled incorrectly – can result in one person taking advantage of the other. Therefore, it’s essential to know how to properly go about a settlement agreement. Fortunately, we are here to help our readers with this exact problem in our article today. Read on to find out 5 useful tips for handling a settlement agreement effectively.
1.) Hire an Employment Solicitor
First and foremost, we suggest contacting an employment law firm to help you with your settlement agreement. Employment solicitors work for these firms, and they are specialists when it comes to employment law. There is nobody better to consult with when it comes to settlement agreements. They will be able to provide effective guidance and help you to draw up the contract, so that you may receive a favorable outcome from the deal. Though employment solicitors can be expensive (they are usually paid at an hourly rate), they are definitely worth every single penny. If you are worried about your settlement agreement and dealing with the conflict surrounding it, they can also help to alleviate your anxieties.
2.) Non-Financial Incentives
The majority of settlement agreements involve financial compensation. However, you can include non-financial incentives within the contract. In fact, these are good bargaining chips when you aren’t happy with the deal that the other party is proposing. For example, as the employer, you could offer to write your former worker a particularly good reference for their next job. You could also allow them to keep their old work laptop and mobile phone. These goodwill gestures might help you to negotiate a better deal overall.
3.) Agree Upon Timelines
You need to give your employee a decent amount of time to consider the offers in your proposed settlement agreement. After all, they are legally binding contracts that can have serious implications. As such, you cannot rush anyone into a settlement agreement – in fact, this could result in your worker claiming you have unfairly dismissed them. Instead, we recommend agreeing upon timelines for conducting a settlement agreement together. This timescale should account for the consideration stage, the discussion stage, and the negotiation stage. Timescales will also ensure that the process swiftly moves along without delay.
4.) Keep a Level Head
Settlement agreements usually result from workplace conflict. As such, their negotiation can become very emotionally charged, giving both parties a lot of grief. Resentment also clouds judgment, so you might act unreasonably or become petty when deciding upon compensation. This kind of behavior will not work in your favor; it could actually escalate the conflict, turning things into a legal battle. Therefore, employers need to keep a level head when negotiating a settlement agreement. Obviously, this isn’t easy – especially if the matter feels personal. However, maintaining an emotional distance should help you to make better decisions and lower your stress levels.
5.) Be Assertive
Sometimes, it is easier to let the other person get their way – especially if you are a conflict-averse person. However, settlement agreements are serious matters, and you can’t allow yourself to be bullied into making a deal that doesn’t sit right with you. Therefore, we encourage employers to be assertive when negotiating their settlements. Once again, an employment solicitor can help with this, as they will provide the reassurance you need that you are making the right decision.
By keeping this advice in mind, you should be able to fairly and amicably draw up a settlement agreement with your employee.